Market Brief – Wednesday 10/7/20

Stocks rallied and Treasury yields gave back most of yesterday’s gains in overnight trading after President Trump unleashed a Tweetstorm last night giving investors hope a stimulus deal is not dead. Stocks struggled to gain traction in early trading while Treasury yields were quiet in early trading as investors looked to today’s reopening of last month’s near-recorded-sized 10-year Treasury auction.

Mortgage applications rose +4.6% last week as purchase applications fell -1.5% and refinance applications rose +8.2% as homeowners look to lock in historically low-interest rates.

The Department of Energy reported crude oil inventories as: Crude: +501k (+294k expected), Cushing: +470k (+882k expected), Gasoline: -1.435mm (-471k expected), and Distillates: -962k (-995k expected). Crude oil initially fell following the report, then regained some of its losses.

Today’s $35 billion 10-year Treasury Note auction was met with strong demand as foreign bidders took 62.9% of the auction and domestic bidders took 14.2% of the auction, leaving securities dealers with 22.9% of the auction or $8.023 billion. Treasury yields rose following the auction.

Stocks finished the day higher as investors refocused on stimulus optimism ahead of the Presidential elections next month. Treasury yields closed higher as sellers continued to slam yields higher but buyers stepped in during the final minutes of trading to push yields back below their intraday highs.